July 2016 IPO Market Review

The IPO market produced 10 IPOs in July, bringing the total number of IPOs over the first seven months of the year to 47–56% below the 106 IPOs over the first seven months of 2015.

Gross proceeds in July were $2.69 billion, the third highest monthly figure over the last twelve months. For the first seven months of 2016, total proceeds are $8.73 billion, or 46% below the $16.15 billion raised over the first seven months of 2015.

The life sciences sector continued to dominate the IPO market in July, accounting for four of the month’s new offerings. Over the first seven months of the year, life sciences companies have produced 24 IPOs, or 51% of the year’s total, up from 47% in 2015 and 40% in 2014.

IPOs by emerging growth companies (EGCs) have accounted for 79% of the year’s IPOs, down from 93% of the total in 2015 and 85% of all IPOs in 2014.

The median IPO offering size over the first seven months of 2016 was $91.0 million, just shy of the $91.7 million for all IPOs in 2015, and 9% below the $101.0 million figure for the five-year period preceding 2015.

The median annual revenue of IPO companies through the first seven months of 2016 was $62.9 million, two-thirds above the $37.8 million median figure for 2015, but almost one-third below the $92.7 million median figure for the five-year period from 2010 to 2014.

Six of the companies that went public in July were profitable, only the third month since the start of 2014 in which a majority of IPO companies were profitable. Over the first seven months of 2016, 38% of IPO companies have been profitable, compared to 30% in 2015 and 36% in 2014, but well below the 54% that prevailed over the five-year period preceding 2014.

Year to date, the average IPO has produced a first-day gain of 10%, compared to average first day gains of 16% in 2015 and 14% in 2014. The average 2016 life sciences IPO company gained 5% in first-day trading, compared to 15% for all other 2016 IPO companies.

In the first seven months of 2016, 26% of IPOs have been “broken” (IPOs whose stock closes below the offering price on their first day). An equal percentage of IPOs was broken in 2015, down 1% from the 27% of broken IPOs in 2014.

At July month-end, the average IPO company was trading 19% above its offering price, 26% of companies were trading below their offering price and 43% were trading below their first-day closing price. Through July, the average 2016 life sciences IPO company was trading 4% above its offering price, while the average non-life sciences IPO company added to its first-day gain to end the month 34% above its offering price.

IPO activity in July consisted of offerings by the following companies listed in the order they came to market:

  • LINE Corporation, a leading global platform for mobile messaging and communication services, content distribution and advertising, priced above the range and produced a first-day gain of 28%.
  • AdvancePierre Foods Holdings, a leading national producer and distributor of value added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks, priced near the low end of the range and ended its first day of trading with a gain of 14%.
  • Audentes Therapeutics, a biotechnology company focused on developing and commercializing gene therapy products for patients suffering from serious, life-threatening rare diseases caused by single gene defects, priced at the midpoint of the range and gained less than 1% in first-day trading.
  • Impinj, a provider of a platform that enables wireless connectivity to billions of everyday items such as apparel, race bibs, golf balls and luggage tags and delivers each item’s unique identity, location and authenticity to enterprise and consumer applications, priced an upsized IPO at the high end of the range and ended its first trading day up 28% from its offering price.
  • Patheon, a leading global provider of outsourced pharmaceutical development and manufacturing services, priced within the range and gained 19% in first-day trading.
  • TPI Composites, the largest US-based independent manufacturer of composite wind blades, priced at the low end of a downwardly revised range and produced a first day gain of 23%.
  • Kadmon Holdings, a fully integrated biopharmaceutical company engaged in the discovery, development and commercialization of small molecules and biologics to address disease areas of significant unmet medical need, priced at the low end of the range and ended its first day of trading down 19% from its offering price.
  • Kinsale Capital Group, an established and growing specialty insurance company, priced at the high end of the range and ended up 15% from its offering price in first-day trading.
  • Tactile Systems Technology, a medical technology company that develops and provides innovative medical devices for the treatment of chronic diseases at home, priced at the expected price and produced a first-day gain of 11%.
  • Talend, a provider of a software platform that integrates data and applications in real time across modern big data and cloud environments, as well as traditional systems, allowing organizations to develop a unified view of their business and customers across organizational and technology silos, priced above the range and ended its first trading day up 42%.

June 2016 IPO Market Review

 

June mustered only seven IPOs, down from 15 IPOs in May, and in sharp contrast to the preceding two years—in both 2014 and 2015, June produced the highest monthly IPO count of the year, with 30 and 33 IPOs, respectively. The June 2016 tally brings the number of IPOs over the first half of the year to 37—the fourth lowest half-year total in at least 20 years, trailing only 2003 (seven IPOs), 2009 (12 IPOs) and 2008 (21 IPOs).

Gross proceeds in June were $590.0 million, bringing the total for the first half of the year to $6.04 billion, 55% below the $13.41 billion raised over the first six months of 2015.

IPOs by life sciences companies accounted for four of the month’s new offerings. In the first half of the year, life sciences companies have produced 20 IPOs, or 54% of the year-to-date total, up from 40% and 47% in 2014 and 2015, respectively.

IPOs by emerging growth companies (EGCs) have accounted for 81% of the year’s IPOs, down from 93% of the total in 2015 and 85% of all IPOs in 2014.

The median IPO offering size over the first half of 2016 was $91.0 million, just shy of the $91.7 million for all IPOs in 2015, and 9% below the $101.0 million figure for the five-year period preceding 2015.

The median annual revenue of IPO companies through the first half of 2016 was $32.0 million, 15% below the $37.8 million median figure for 2015, and almost two-thirds below the $92.7 million median figure for the five-year period from 2010 to 2014.

The median annual revenue of life sciences IPO companies through the first half of 2016 was $0.9 million, compared to $435.7 million for all other companies. Over the five-year period preceding 2016, the median annual revenue of life sciences IPO companies was $1.5 million, while the median annual revenue of all other IPO companies was $154.0 million. The comparatively high figure for non-life sciences IPO companies in 2016 is partly attributable to the presence of large private equity–backed IPO companies within an overall small sample size of non-life sciences IPO companies.

None of June’s IPO companies were profitable. Over the first half of 2016, only a dozen IPO companies—or 32% of the total—were profitable. While the 2016 profitability figure falls between the 36% in 2014 and 30% in 2015, it remains well below the 54% that prevailed over the five-year period preceding 2014.

The lower profitability figures over the last three years have been largely driven by the large number of life sciences company IPOs. Over the first half of 2016, no life sciences IPO companies were profitable, compared to 71% of the 17 non-life sciences IPO companies being profitable.

Year to date, the average IPO has produced a first-day gain of 8%, with 30% of IPOs “broken” (IPOs whose stock closes below the offering price on their first day). In comparison, the average first-day gains in 2014 and 2015 were 14% and 16%, respectively, and broken IPOs represented 27% and 26% of those year’s tallies, respectively.

At June 30, the average IPO company was trading 19% above its offering price, having produced a gain of almost 10% from its first-day close. In contrast, while the average IPO company in 2015 produced a first-day gain double that of the average IPO company in the first half of 2016, by the end of 2015 that gain had been entirely erased, with the average 2015 IPO company ending the year down less than 1% from its offering price.

IPO activity in June consisted of offerings by the following companies listed in the order they came to market:

  • Clearside Biomedical, a late-stage clinical biopharmaceutical company developing first in-class drug therapies to treat blinding diseases of the eye, priced at the expected price and ended its first day of trading with a gain of 4%.
  • Nant Health, a leading next-generation, evidence-based, personalized healthcare company enabling improved patient outcomes and more effective treatment decisions for critical illnesses, priced at the midpoint of the range and produced a first-day gain of 33%.
  • Sensus Healthcare, a medical device company specializing in the treatment of non melanoma skin cancers and other skin conditions, such as keloids, with superficial radiation therapy, priced an upsized IPO below the range and gained 17% in first-day trading.
  • Atkore International Group, a leading manufacturer of electrical raceway products primarily for the non-residential construction and renovation markets and mechanical products and solutions for the construction and industrial markets, priced below the range and was flat in first-day trading.
  • China Online Education Group, a leading online education platform in China, with core expertise in English education, priced at the midpoint of the range and ended its first day of trading down two cents from its offering price.
  • Twilio, a developer of software that enables developers to embed voice, messaging, video and authentication capabilities into their applications via its simple-to-use application programming interfaces, priced above the range—the first company to do so since December—and jumped 92% in first-day trading.
  • Syros Pharmaceuticals, a biopharmaceutical company pioneering an understanding of the region of the genome controlling the activation and repression of genes, priced below the range and gained 45% on its first day of trading.